32,000 Jobs to go at Deutsche Telekom

Gemany’s incumbent telco, Deutsche Telekom, is to lay off a total of 32,000 employees from within the Group over the next three years at a cost of EUR 3.3 billion for the entire program.

Due to the massive changes in the industry, Deutsche Telekom faces comprehensive staff restructuring measures. These will include socially acceptable measures to reduce the number of employees, new positions for junior experts as well as the divestiture of Vivento units. The Board of Management has informed the employee representatives of this and has initiated negotiations.

“The worldwide realignment of the industry, the rapid pace of technological development and, in particular, the tough competitive environment in the fixed network and broadband sector in Germany imposed by the regulatory situation, intensify the challenges facing the entire Deutsche Telekom Group,” CEO Kai-Uwe Ricke emphasized. “On the one hand, we have to cut jobs in old core markets; on the other, there are opportunities to create jobs in new innovative markets.”

In the next three years, about 32,000 employees in Germany will leave Deutsche Telekom. This includes about 7,000 employees whose positions will be outsourced from Vivento on a permanent basis. These employees will no longer work for Deutsche Telekom, but for other companies. One example of this are the Vivento Call Centers. While a further 25,000 employees are to leave the Group, around 6,000 new staff are to be employed. These will comprise, for example, young experts and trainees for T-Punkt shops. Thus, the net reduction of jobs over the next three years will be 19,000.

The background of this net job reduction of 19,000 is the comprehensive restructuring of jobs within the Group. The gross reduction of 27,000 jobs is partially offset by the creation of about 8,000 jobs. 20,000 jobs will be cut at T-Com as part of the Simplicity project, 1,500 in the Group’s centralized functions and 5,500 at T-Systems. 5,000 jobs will be created for the rollout of the high-speed fiber-optic network and 3,000 jobs at T-Punkt shops. Future and present employment potential is, however, greatly dependent on regulatory decisions. For instance, if the development of a high-speed fiber-optic network were endangered by regulation of this new market, an additional 5,000 jobs would be jeopardized.

The cost of the entire program is about EUR 3.3 billion spread over three years.

“Job cuts are to be made via voluntary measures, such as old-age part-time work and severance payments. With regard to civil servants, talks with the federal government about early retirement programs will be necessary. The talks will begin after the federal government has been constituted,” CHRO Dr. Heinz Klinkhammer emphasized. “As agreed, there will be no compulsory redundancies at DTAG before the end of 2008.”

The collective agreement for Deutsche Telekom AG concluded last year includes a moratorium that stipulates that after the planning phase and before any final decision is made by the Board of Management, discussions must be held with the employee representatives concerning any staff reductions. These discussions have already begun.